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November 9, 2018
While there are still several races where votes are being counted, or are moving to a potential recount, the overall picture from the midterm elections is clear. In the House, the Democrats currently have a 28 seat majority, and in the Senate, Republicans maintained their majority and gained several seats. At the state level, Democrats picked up half a dozen statehouses, including gaining full control of legislatures and governorships in Colorado, Illinois, Maine, New Mexico, New York, and Nevada. In Kansas, Michigan, New Hampshire and Wisconsin, Democrats gained the governorships and Republicans maintained control of the legislature.
And while the bioeconomy – biofuels, biobased products, chemicals, and more – enjoy bipartisan support, the new political landscape means that the biobased sector and stakeholders still need to be on their toes. With one of the largest freshmen classes ever, and a more partisan Senate, stakeholders will need to be present early and often to help Congress understand the importance of low carbon petroleum alternatives to fuels, chemicals and products. Today, EESI looks at some of the major policy issues that intersect with the bioeconomy and how the new Congress may take up these issues.
Takeaways for the bioeconomy:
In the House – Climate and Oversight Two Big Issues for New Congress
Regaining the House for the first time in nearly a decade, Democrats will be chomping at the bit to increase oversight activities of the Trump administration, particularly with regard to environmental protection, and raise the profile of the federal government’s role in combatting climate change. Having a leadership roster that understands that humans are causing global warming can make a significant difference in debate and policy development, as compared to the past Congress in which most Republican Committee chairs in the House did not admit to human-caused climate change.
This will set the stage for hearings on climate change in the House Committee on Science, Space and Technology, Energy & Commerce, Transportation & Infrastructure, and others. Representative Paul Tonko (D-NY), expected to be appointed Chairman of the Energy & Commerce Committee’s Environment Subcommittee, commented that climate change legislation would be “tough … to be approved by this administration.”
Despite anticipated intransigence on larger climate measures in the 116th Congress, House members will likely advance climate adaptation and mitigation efforts through other measures addressing grid modernization, infrastructure and energy efficiency. Rep. Tonko has also expressed interest in Renewable Fuel Standard (RFS) oversight, something that his Republican colleagues struggled to find any meaningful “compromise” to in the 115th.
In addition, the International Panel on Climate Change (IPCC)’s recent 1.5 Degree Warming Report gives increased urgency to climate change as a political issue, as the consensus report warns we have only about 12 years left to stem the tide against catastrophic effects of climate change. Looking toward 2020 elections, the Democrats are hoping to build a record and policy recommendations in all areas, including climate, energy and environment. Increasingly, younger voters on both sides of the aisle are looking toward their elected officials to present meaningful policy solutions for dealing with climate change.
In the House, the key for biobased stakeholders will be 1) presenting the evidence that biofuels and biobased products are necessary for mitigating climate change, and 2) making sure that any policy platforms on the table for climate mitigation include biofuels as a meaningful contributor to any climate solution. While you might think that biofuels and climate should be a slam-dunk with Democrats, there are a core group of House Democrats who believe that biofuels are bad for the environment, engines and food supplies. Now in the majority, their voices will be louder as well.
Senate Increases Republican Control, Especially in Midwest
Several vulnerable Democratic Senators lost to conservative Republicans backed by President Trump. Based on election cycles, these losses were concentrated in agricultural states that voted overwhelmingly for Trump in 2016, including North Dakota, where Heidi Heitkamp (D) lost to Kevin Cramer (R), in Indiana, where Joe Donnelly (D), lost to Mike Braun (R), and in Missouri, Claire McCaskill (D) lost to Josh Hawley (R). In these states, voters in rural counties overwhelmingly turned out for Republicans, which begs the question, what issues are driving rural voters in those states?
There is a general sense in these districts that the Obama administration forgot about rural America, while Trump has made them a signature piece of his administration and campaign. Rural agricultural districts seem to feel that the administration has their interests at heart – from trade tariffs, to approving year-round E15. This thinking largely played out in the election.
As reported in the New York Times, rural ag-state voters expressed confidence in President Trump’s ability to broker better trade deals with China and elsewhere, with 93 percent of rural voters in North Dakota voting Republican. Additionally, while Democrats picked up impressive gains in the House, Republicans held on to 17 of the 25 House districts with the strongest ties to agriculture.
One corn and soy farmer in Illinois expressed a common sentiment. “I think our pain definitely has a purpose … I don’t think the balance of trade with China has been fair for a long time.” It remains to be seen what the final outcome of the trade tariffs will be, currently, farmers are experiencing increasingly tight margins while carefully cultivated foreign markets have disappeared – seemingly overnight.
Additionally, the Administration’s October announcement that they would seek to approve year-round E15 further bolstered voters in these big biofuel producing states, who felt the Trump administration was making good on campaign promises and increasing markets for biofuels.
Lame Duck Gives Increased Urgency to Tax Extenders, Farm Bill
Given the change in leadership, the current Congress will likely seek to tie up any unfinished business during the lame duck. This includes outstanding appropriations bills, tax extenders, and perhaps the Farm Bill.
In the tax extenders package, various groups have been advocating for inclusion of the Renewable Electricity Tax Credit Equalization Act, which would renew tax credits that have lapsed for baseload renewables, including: biomass, geothermal, landfill gas, waste to energy, hydropower, marine and hydrokinetic energy. Other renewables, including wind and solar, received long term tax credits which are slowly being phased down. Additionally, it is reported that a retroactive $1.00 biodiesel/renewable diesel blender’s credit will likely be passed during the lame duck, but will again expire at the end of 2018.
On the Farm Bill, conference leaders are expressing interest in passing a Farm Bill during the lame duck. House Agriculture Committee Ranking member Peterson (D-MN) still wants the bill to pass during the lame duck; however, it’s not clear if he has the backing of his Democratic colleagues, particularly with regards to the contentious changes that the GOP has sought to the nutrition title. Funding for Energy Title programs, which are mostly aimed at growing the domestic bioeconomy, expired when the Farm Bill lapsed in September, but the larger titles have some breathing room.
Bioeconomy Issues for the 116th Congress
In the new Congress, there are a few issues EESI expects will be top-of-mind for the bioeconomy, including approving year-round E15, implementation of the Renewable Fuel Standard (RFS), and fuel efficiency (CAFE) rules. If the biofuels industry can make a compelling case to House Democrats on the benefits of biofuels (health, climate), they may find Democrats willing to take EPA to task over RFS implementation, including EPA’s failure to move on the use of waivers, pending fuel pathways, and cellulosic fuel volumes. In the Senate, ag-state Republicans will hold even more power and will likely continue their pressure on the administration to finalize E15 and deal with RFS-related fuel waivers, in particular.
No major course correction is anticipated with leadership at the major agencies dealing with the bioeconomy -- USDA, EPA, and DOE. Sonny Perdue (USDA), Andrew Wheeler (EPA), and Rick Perry (DOE), have largely avoided controversy and the limelight, two things critical to surviving in the current administration. In the 115th Congress, bioenergy programs at DOE fared fairly well through appropriations, and EESI expects that to continue. Wheeler also recently had a change of heart and now feels that EPA has the authority to allow year-round sales of E15, and expects to give notice of proposed rulemaking early in 2019. Additionally, EESI does not expect any change to the administration’s policy to treat biomass as carbon neutral, so long as forestry stocks are stable or increasing.
However, despite the appearance of calmer waters ahead for the bioeconomy – if the 115th Congress has taught us anything – is to prepare for the unexpected.
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